What is portfolio management? | APM (2024)

FAQs

What is portfolio management? | APM? ›

Portfolio management is the selection, prioritisation and control of an organisation's programmes and projects, in line with its strategic objectives and capacity to deliver. The goal is to balance the implementation of change initiatives and the maintenance of business-as-usual, while optimising return on investment.

Portfolio management is the selection, prioritisation and control of an organisation's programmes and projects, in line with its strategic objectives and capacity to deliver. The goal is to balance the implementation of change initiatives and the maintenance of business-as-usual, while optimising return on investment.

The four distinct types of portfolio management are active, passive, discretionary and non-discretionary management.

Portfolio managers are investment decision-makers. They devise and implement investment strategies and processes to meet client goals and constraints, construct and manage portfolios, make decisions on what and when to buy and sell investments.

The fundamental objective of portfolio management is to help select best investment options as per one's income, age, time horizon and risk appetite. Nonetheless, to make the most of portfolio management, investors should opt for a management type that suits their investment pattern.

So the portfolio manager according to the risk-taking capacity and the kind of returns calculated provides a portfolio structured in tandem with that. So for example, the portfolio could include real estate, fixed deposits with banks, mutual funds, shares, and bonds.

An ideal diversified portfolio would include companies from various industries, those in different stages of their growth cycle (e.g., early stage and mature), some companies from foreign countries, and companies across a range of market capitalizations (small, mid, and large).

The basic premise of Olivier Lazar's book is his description of the four pillars of Portfolio Management: Organizational Agility, Strategy, Risk, and Resources.

How do portfolio managers get paid? ›

Mutual fund portfolio manager compensation comes from a mix of a base salary, fulcrum fees, deferred compensation plans, equity and stock options, performance bonuses for the company and teams, and nonmonetary benefits.

Analytical and quantitative skills: Strong analytical skills are a necessity. Portfolio managers need to analyze large volumes of data, understand financial statements, and use quantitative models to make investment decisions. Risk management: The ability to make informed decisions quickly is also essential.

Portfolio management is the right choice when you have a diverse portfolio of projects, programs, and other initiatives, and you want to ensure they align with your business strategy. Portfolio management allows for strategic decision-making, resource optimization, and risk management across the entire portfolio.

Want to diversify your portfolio: If you want to diversify your portfolio, portfolio management is definitely meant for you. Diversification requires knowledge of multiple markets, which may take years of experience to master.

Portfolio management is a high-level career path, with a salary to match. The median wage for financial managers was $139,790 in May 2022, according to the U.S. Bureau of Labor Statistics (BLS). That's significantly higher than the $46,310 median pay for all workers.

Portfolio management involves building and overseeing a selection of assets such as stocks, bonds, and cash that meet an investor's long-term financial goals and risk tolerance. Active portfolio management requires strategically buying and selling stocks and other assets to beat the broader market's performance.

As per portfolio definition, it is a collection of a wide range of assets that are owned by investors. The said collection of financial assets may also be valuables ranging from gold, stocks, funds, derivatives, property, cash equivalents, bonds, etc.

The main appeal of portfolio management is that a client can 'hand off' their portfolio of assets to experts who will manage and grow the value of their portfolio over time while minimising risk and ensuring that the portfolio does not depreciate.